Posted by: Dan | August 30, 2006

Fair Price for Energy? Yes, please

Here’s an interesting proposal for how to deal with carbon taxes, that Jeff from Sustainblog has already mentioned, from a NREL researcher in Boulder, Colorado – Chaz Teplin. The site is Fair Price Energy, and a PDF of the proposal is available also.

Essentially, the plan is to implement a Security Fee that would be directly related to how that fuel or source of energy compromises our national security, and a Carbon Fee — there would be high carbon fees for energy sources that contribute large amounts of greenhouse gases or are dangerous to extract (e.g., coal, oil, natural gas), while cleaner technologies (e.g., nuclear, wind, and solar) would have no carbon fees at all.

But average people would probably object to any plan where they have to pay extra, so there’s a built in relief valve: a “Fee Return” refund in their Income Taxes that would be equal to the total fees collected for the entire country during the year divided by the total number of US taxpayers.

It’s simple, and addresses the problem, as far as I can see – and at the same time minimizing the burden on the average citizen. What objections could there still be?


Responses

  1. This doesn’t seem “fair” to the other sources of energy. You would have to implement a radioactive fee for nuclear, a habitat and landscape destruction fee for wind, a river destruction fee for hydroelectric, and so on. And to be “fair” you would have to set fees for other environmental harmful activities such as a agriculture, fisheries, forestry, etc. I can imagine awful levels of lobbying by different sets of producers and consumers to influence government decisions on fees. And lobbying has driven us to the present state of affairs in the first place, where government uses taxpayers’ money to *subsidize* energy, agriculture, fisheries, forestry, etc.

  2. Instead of setting up a bureau of philosopher-kings to discern the extent to which these emissions are harmful, wouldn’t it be easier to turn to market forces and property rights to stem the tide of pollution? If property owners had the exclusive right to pollute their property, then nobody else could do it without their permission. Folks who wanted to engage in activity that might pollute my property, for instance, would weigh the cost of obtaining a license from me to do so against the cost of various pollution controls.

    And the right to pollute could be separated from the right to live there, like conservation easements. Sierra, TNC, AMC et al. could buy up the pollution rights to areas they wanted to keep clean, without having to buy the land.

    It would also take away a lot of the corruption that inevitably follows whenever the government wields new power over the people.

  3. BioPolitical,
    Good points – it may be difficult to define the criteria for what the fees cover, and how much they would be. I’m not so sure, however, that the wind and hydroelectric fees would have a basis for inclusion in the fee system. Afterall, just about every energy system that I’m aware of is viewed negatively in terms of impact on the local environment.

    Good reminder on lobbying problems also.

    Tor,
    I think the property owners solution you describe would work well for most people, until you add developers and business into the mix (they own land too). Those groups would have no problem fouling up their land in ways that negatively impact their neighbors, if they profit from it, which they surely would. I’m not sure how your solution of turning to market forces and property rights addresses this potential problem.

  4. The point is they may foul up their land, not their neighbors’ land. If they are negatively impacting the neighbors, or impacting the neighbors in any way that they don’t like (whether it’s scientifically proven to be negative or not), they will either have to enter a licensing agreement with the neighbors, or figure out a way not to impact the neighbors.

    As it stands now, since the philosopher-kings of the EPA get to decide, for instance, what an allowable amount of arsenic is that may be leached into a neighbor’s water supply, anyone who is impacted below that threshold has no recourse. If pollution rights are understood also to include the right to have one’s property be pristine from artificial pollution sources outside of it, then polluters will have to deal directly with their neighbors.

  5. Tor,
    Ok – that sounds like a reasonable (nay, highly effective) solution to pollution, but I’m not sure I see how that applies to the topic at hand – addressing larger scale (class action?) issues concerning the security of where our energy (petroleum) comes from, and how it effects the global/regional environment.

    I don’t see how market forces or property rights solutions address those problems, athough market forces will eventually shift the national energy supply away from oil and to more sustainable alternatives, provided the technology and resources exist for those alternatives to take up the slack. I think of the various carbon tax options as assisting the market forces in this direction, by encouraging the shift towards alternatives a bit earlier than it would otherwise happen, thereby encouraging development of alternative technologies now. The neat part about Chaz’s plan seems to be that it takes the burden off the individual consumer, at least a little bit.

    Also, “philosopher-kings”?!

  6. Tor,
    Your ideas for creating pollution rights that are comparable to property rights are interesting, and might work for many kinds of pollution – you mention arsenic, for example. But what about carbon? Carbon emmissions affect everybody! If I want to drive to the store, do I have to buy off the pollution rights for all of China? Similar problems exist for many other pollutants. What about polluting the ocean? Who gets to buy the pollution rights there? There is also some issues of fairness – in order to live in a clean, pollutant-free area, do I have to be wealthy enough to purchase pollution rights? Regardless, I am intrigued by your ideas. If you want, send me an email and I will add them to the comments section at http://FairPriceEnergy.com.
    BioP,
    You also bring up good points, namely that setting the fees for each fuel will be a political challenge. You are also correct about existing subsidies, for both fossil fuels and renewables. I chose to stay away from that topic at FairPriceEnergy because I felt it was too contentious and too difficult to do both simply and well.

    Cheers,
    Chaz

  7. It seems like a fair plan. A great way to promote clean energy, while not abolishing the old and dirtier energy sources. A plan that could definitely use some work, but nonetheless a great place to start.


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